Despite federal support, Portland housing market stumbles in February

The Portland housing market stumbled again in February, another signal that federal stimulus may not be enough to carry the industry into a sustainable recovery.

The median price for homes sold in February tumbled to $235,000, according to the Regional Multiple Listing Service report released Tuesday. That's the lowest price since May 2005 and a new low since the downturn began.

February's median price is 22 percent off the 2007 peak of $302,000.

The price drop partly reflects the fact that the sales mix is dominated by lower-priced homes attractive to first-time buyers and investors. But what's more troubling is that the inventory of unsold homes grew in February.

The inventory, a key measure of whether supply outpaces demand, accounts for the time it would take to sell all listed homes at the current months sales volumes.

Normally, the inventory drops between January and February.

As the spring buying season approaches, more sellers plant a "For Sale" sign in their yard, and buyers return to the market. This year, the number of homes listed for sale grew, but the number of buyers isn't keeping pace.

Over the past five years, the inventory has dropped, on average, 15 percent between January and February. But this year, the inventory rose by 2 percent from 12.6 to 12.9 months, about double a healthy market.

Sales also are lagging. Over the past five years, the number of closed sales has jumped about 17 percent between January and February. This year it rose just 3 percent.

"We're not seeing the shoppers to compensate for the inventory coming out," said Tim Duy, a University of Oregon economist.

The federal government has tried to stimulate the housing market with an extended and expanded homebuyer tax credit, low interest rates and low-down-payment loans from the Federal Housing Administration.

But Duy said Portland's February report shows that buyer demand continues to be depressed by banks' tighter lending standards, double-digit unemployment and home prices that are still relatively high compared with household incomes in Portland.

Last fall, the $8,000 tax credit for first-time buyers sparked demand for lower-priced homes. Home sales rose before the first version of the credit expired Nov. 30. Congress extended the credit to sales under contract by April 30 and expanded it to existing homeowners.

But February's report provides more evidence that the extension isn't doing much to spark sales. "There was obviously a rush at the end of last year, and now that rush is largely over even though it was extended," Duy said.

The report is a major improvement from last winter, when the market struggled to shake off the Wall Street crash and a snowstorm.

But the February report, at best, signals the Portland market is moving sideways. Duy said a sluggish economy and tight mortgage lending suggest prices will either continue to fall or remain flat until incomes grow.